Reduced financial support to manufacturing may slow down diversification, job creation efforts, MAN warns

The Manufacturers Association of Nigeria (MAN) has warned that critical diversification efforts and job creation initiatives may be hindered if the nation’s manufacturing sector continues to experience reduction in financial support.

The association, in a report released by its Director General, Segun Ajayi-Kadir, revealed a contraction of commercial bank credit allocation to manufacturing by N1.92 trillion, from N8.53 trillion in December 2024 to N6.61 trillion in December 2025.

It described the 22.5 percent contraction as particularly disturbing, since the sector recorded one of the largest credit contractions among the top sectors, surpassed only by the General Services sector at 25 percent.

The association, therefore, argued that continued reduction in credit access could further limit capacity utilisation, stall technological upgrades and leave the nation more vulnerable to external commodity shocks and supply-driven inflation.

MAN identified a ‘toxic’ combination of prohibitive interest rates, structural bureaucracy and policy misalignment as some of the factors responsible for the contracted distribution of credit to manufacturing.

On the prohibitive interest rates, the association argued that the primary barrier between manufacturers and financial bank liquidity remains the exorbitant cost of borrowing.

It noted that, while the Central Bank of Nigeria (CBN), recently, made slight policy adjustments by trimming the Monetary Policy Rate (MPR) to 26.5 per cent to signal disinflation, commercial lending rates still remain actively hostile to manufacturing sector expansion.

According to MAN, the steep -22.5 per cent year-on-year contraction in commercial credit allocation to manufacturing creates severe bottlenecks across the entire sector.

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It argued that with the commercial borrowing costs remaining actively hostile at an average of 24.4 per cent prime lending rates and 33.8 per cent maximum lending rates, long-term capital investments would remain unviable.

The association stated that starving factories of affordable credit blocks technology upgrades and prevents operators from maintaining optimal capacity utilisation or expanding local manufacturing plants.

“It is practically impossible to build a 21st-century industrial economy when forcing factories to fund their capital footprint through 19th-century primitive capital constraints.

“The sharp decline in credit to manufacturing can severely dampen the sector’s output, causing its contribution to real Gross Domestic Product (GDP) to remain structurally hobbled below the 10 per cent mark, hovering tightly at 9.57 per cent,” MAN said.